It’s time to take foreign aid theft seriously

By Jessica Trisko Darden

There is an ongoing campaign of forced starvation in Yemen. Yet, the UN’s World Food Programme (WFP) announced on June 20 that it is partially suspending food aid in Yemen’s capital, Sana’a — a move that will likely affect 850,000 Yemenis. This difficult decision followed months of unsuccessful negotiations with Houthi rebels over establishing a biometric registration system for aid recipients. According to WFP’s Executive Director David Beasley, at least 10% of WFP’s $175 million per month aid deliveries were being diverted away from starving civilians to fund the Houthis’ brutal insurgency.

The challenges facing humanitarian aid

In fraught conflict zones such as Yemen, Syria, or Somalia, providing humanitarian assistance is a risky business. In addition to protecting aid workers and recipients from armed group attacks, maintaining the neutrality and integrity of aid remains a major challenge. The most recent US National Terrorist Financing Risk Assessment detailed how terrorists are using charitable organizations abroad to raise and move funds, as well as to dispense humanitarian services as a way of radicalizing individuals and building local support. Terrorist diversion of humanitarian assistance is compounded by the problem of fraud within aid agencies and, in some cases, even among refugee host governments.

Compared to the private sector, where retail losses due to theft average 1.33% of sales, estimates of foreign assistance loss due to fraud or diversion range from 2% to as high as 15%, according to industry insiders. Since January 2015, USAID’s Office of the Inspector General — an independent agency tasked with monitoring US foreign assistance — has documented more than 350 allegations of fraud, theft, armed group involvement, bribery, and other issues involving US aid in Iraq and Syria alone.

As one of the world’s largest sponsors of humanitarian assistance, the United States must ensure that American taxpayer-funded relief reaches those most in need. However, relations between the United States and its non-profit, humanitarian partners who distribute this aid have soured. According to Harvard’s Program on International Law and Armed Conflict, 16% of humanitarian NGO employees surveyed felt they could not always be forthright with donors regarding concerns about designated terrorist groups. Some explicitly linked this hesitancy to potentially losing donor funding. InterAction, an advocacy group for international development NGOs, acknowledges that “…when organizational survival is at stake, incentives to keep quiet become greater than those to alert partners to problems.”

More money, more problems

Stricter enforcement of US counterterrorism regulations — though needed — clearly won’t solve all of the humanitarian sector’s current challenges, which include manipulation, fraud, and sexual abuse, in addition to terrorist diversion. But throwing more money at NGOs won’t address these problems either.

Some in the humanitarian sector argue that more donor money is needed to improve NGO behavior. For example, the Norwegian Refugee Council’s executive director argues, “if donors want humanitarian outcomes from their support, they need to be willing to provide funding for compliance units, inspection teams, conflict analysts and other measures to give agencies the capacity to provide assistance in a responsible way.” But giving NGOs and their local partners more money to spend simply puts more taxpayer dollars at risk.

You can read the full opinion article at American Enterprise Institute here.